I’m honored again this year to be a part of The Heavy Purse’s Financial Literacy Awareness Carnival. For more information on this spectacular annual event, you can check out this link to The Heavy Purse. The subject for this year’s carnival is Getting Financially Real. Dave Ramsey refers to this as “facing the man (or woman) in the mirror. Getting financially real is often the most difficult part of a road to debt free, and often the reason so many people stay broke for so long. Personally, we had tried to get out of debt several times prior to our “real” attempt in January of 2013. And many times we succeeded at eliminating our debt, but we always fell right back into more debt. Why? Because we never got “financially real” with ourselves. We never saw “ourselves” as the problem. Instead, we blamed expenses that we “had no choice” over, our “lack” of income and a host of other things and circumstances. What we refused to blame up until January 2013, however, was ourselves. When we finally did place the blame for our financial situation where it belonged – in our lap – we dealt with some pretty tough months. It’s not easy accepting responsibility for a bad situation. It’s not easy looking yourself in the mirror and owning up to all of the choices you’ve made over the years that could’ve been made differently and resulted in a secure financial situation instead of a crapload of debt. The months that followed our choice to take responsibility for our debt were plagued with guilt, regret and sadness. We had a hard time forgiving ourselves for the bad choices we had made. When, however, we finally chose to let it go and focus on remedying the situation, that is when the REAL change began. We used all of the energy we’d been putting into guilt and regret into making our plan work. We learned how to budget, how to spend track, and how to earn more money. We began researching and implementing a more minimalist type of a lifestyle and a more self-sufficient lifestyle. We learned how to stop caring what the Joneses thought and start caring about what WE thought and wanted. And that, my friends, was a serious game-changer; it allowed us to start dumping debt for good, because we no longer wanted to be in debt, no matter what ANYONE thought.
How We Got Financially Real, and How You Can Too
Here’s a summary of the steps we took in order to get financially real. They’re not all easy, but they are all beneficial when it comes to taking control of your financial life:
1. We wrote down our numbers and faced up to the financial facts of how much we owed, to whom we owed it, and how much it was costing us each month.
2. We went back and tracked our previous year’s spending using bank statements and credit card bills. This was tough. Three months in we realized that we had been piddling away LOTS of money.
3. We analyzed our financial choices over the decades and thought about how things could’ve been different if we’d made different choices.
4. We allowed ourselves to be upset, sad, depressed, angry, etc. about our situation – for a time. This is key. Pity parties are okay as long as they’re temporary.
5. We created a budget, a spend-tracking sheet (we use a simple Excel spreadsheet) and a plan for paying down our debt.
6. We continued to analyze our plan on a regular basis and revise it when necessary.
7. We committed to sticking with the plan – no matter what. This is key. Setbacks almost always come when you create a plan to get out of debt. Don’t let them get you down or cause you to give up. Be stronger than the setbacks that come your way. These are the 7 steps to getting financially real that have been working for us. For the last two years, we’ve been successfully eliminating our debt. There have been some bumps in the road and some setbacks, but the numbers are indeed going DOWN.
Getting financially real is an integral part of our three steps to being prepared and self-sufficient. My dear friends, don’t short-change yourselves when it comes to financial freedom. Instead, choose to get financially real with yourself and start pursuing the financial life I know you can have. Facing the man/woman in the mirror might be tough, but if you stick to your plan, it’ll be well worth it.